Exhibit 10.48
INVESTMENT AGREEMENT
dated as of May 20, 2008
between
MF GLOBAL LTD. and
J.C. FLOWERS II L.P.
TABLE OF CONTENTS
Page Recitals: 1 Article I Other Offerings; Backstop; Closing 1.1 Other Offerings 1 1.2 Backstop 2 1.3 Closing 2 1.4 Interpretation 5 Article II Representations and Warranties 2.1 Disclosure 5 2.2 Representations and Warranties of the Company 6 2.3 Representations and Warranties of the Investor 18 Article III Covenants 3.1 Reasonable Best Efforts 20 3.2 Expenses 20 3.3 Publicity 20 3.4 Sufficiency of Outstanding Common Shares 20 3.5 Withholding of Tax 21 3.6 Anti-Trust Clearance 21 3.7 Investor Representatives 21 3.8 Directors 25 3.9 Conduct of Business 25 3.10 Certain Tax Matters 26 3.11 Certain Adjustments 27
- i - Article IV Additional Agreements of the Investor 4.1 Standstill Agreement 28 4.2 Lock-Up 30 4.3 Transfer Restrictions 31 4.4 Purchase for Investment 33 4.5 Legend 33 4.6 Indemnity 34 Article V Miscellaneous 5.1 Survival 36 5.2 Termination 37 5.3 Amendment 38 5.4 Waiver of Conditions 38 5.5 Expenses 38 5.6 Counterparts and Facsimile 38 5.7 GOVERNING LAW; SUBMISSION TO JURISDICTION, ETC. 38 5.8 Remedies 39 5.9 Notices 39 5.10 Entire Agreement, Etc. 40 5.11 Definitions of " subsidiary" and " Affiliate" 41 5.12 Severability 41 5.13 No Third-Party Beneficiaries 41
- ii -
LIST OF ANNEXES
Annex A Purchased Securities Annex B Certificate of Designations Annex C Registration Rights Agreement Annex D Form of Opinion of Conyers Dill & Pearman Annex E Form of Opinion of
Sullivan & Cromwell LLP Annex F Bank Financing/Other Debt Financing Annex G Current Report of Form 8-K Annex H Amendment of Rights Agreement Annex I Investor Representative Letter of Resignation Annex J Form of Assignment
LIST OF SCHEDULES
Schedule 1.3(c) Company Regulatory Approvals Schedule 2.2(b)(ii) Obligations to Sell or Issue Equity Schedule 2.2(b)(iii) Registration Rights Schedule 2.2(g) Proceedings Schedule 2.2(h) Unauthorized Trading Matters Schedule 2.2(i) Liabilities and Obligations Schedule 2.2(j) Material Adverse Changes Schedule 2.2(m) Property and Leases Schedule 2.2(p) Agreements with Regulatory Entities Schedule 2.2(r) Tax Matters
- iii - Schedule 2.3(b)(iii) Investor Regulatory Approvals Schedule 3.7 Investor Representatives Schedule 4.3(b) Competitors Schedule 5.5 Expenses
- iv -
INDEX OF DEFINED TERMS
Term
Location of
Definition
Actual Number Recitals
Affiliate 5.11(b)
Agreement Preamble
Bankruptcy Exceptions 2.2(d)(i)
beneficial ownership; beneficially owned 4.1(d)
Certificate of Designations Recital B
Change of Control 4.1(c)
Closing 1.3(a)
Closing Date 1.3(a)
Code 2.2(r)(vii)
Commission 2.1(c)
Common Shares Recital A
Company Preamble
Company Financial Statements 2.2(h)(iii)
Company Plan 2.2(s)(i)
Company Reports 2.2(h)(i)
Competitor 4.3(b)
Current 8-K Report 2.1(c)
De Minimis Claim 4.6(e)
Equity Securities 4.1(d)
ERISA 2.2(s)(i)
Exchange Act 2.1(c)
Form S-1 2.1(c)
GAAP 2.2(i)
Hedging Transaction 4.2
HSR Act 3.6
IPO Registration Statement 2.1(c)
Intellectual Property 2.2(l)
Indemnified Party 4.6(c)
Indemnifying Party 4.6(c)
Investor Preamble
Investor Material Adverse Effect 2.3(b)(ii)
Investor Representative 3.7
IRS 1.3(d)(ii)
Lock-Up Period 4.2
Losses 4.6(a)
Material Adverse Effect 2.2(a)
Maximum Number Recitals
Minimum Number Recitals
Money Laundering Laws 2.2(o)(iv)
- v -
NYSE 1.3(c)
Offering 1.1
One Director Amount 3.7(a)
Permitted Transferee 4.3(b)(ii)
PFIC 2.2(r)(ix)
PFIC Annual Information Statement 3.10(c)
Pre-Closing Period 3.9
Publicly Disclosed Information 2.1(c)
Purchase 1.2
Purchased Securities 1.2
QEF Election 3.10(c)
Registration Agreement 1.3(b)
Regulatory Agreement 2.2(p)
Regulatory Entities 1.3(c)
Sarbanes-Oxley Act 2.2(o)(iii)
SEC Filings 2.1(c)
SEC Reports 2.1(c)
Securities Act 2.2(a)
Series A Shares Recital B
Significant Subsidiary; Significant Subsidiaries 2.2(a)
Standstill Termination Event 4.1(c)
subsidiary 5.11(a)
Tax 2.2(r)(ix)
Tax Returns 2.2(r)(ix)
Threshold Amount 4.6(e)
Transaction Documents Recital B
Transfer 4.3(a)
Transfer Notice 4.3(b)
Two Director Amount 3.7(a)
Voting Shares 4.1(d)
- vi -
INVESTMENT AGREEMENT , dated May 20, 2008 (this " Agreement" ), between MF Global Ltd., a Bermuda exempted company (the " Company" ), and J.C. Flowers II L.P.(the " Investor" ).
RECITALS: A. The Company . As of the date hereof, the Company has (i) 1,000,000,000 authorized common shares, $1.00 par value per share (" Common Shares" ), of which, as of April 30, 2008 120,046,739 shares were issued and outstanding; and (ii) 200,000,000 authorized preference shares, $1.00 par value per share, of which no shares are outstanding. B. The Issuances . The Company currently intends (i) to issue and sell an amount of a series of its preference shares having the designation, powers, preferences and rights set forth in a certificate of designations in the form attached as Annex B (the " Certificate of Designations" and such series of preference shares, the " Series A Shares" ) in one or more private placements and/or public offerings and (ii) to issue and sell to the Investor, and the Investor intends to purchase from the Company, a number (the " Actual Number" ) of Series A Shares equal to (x) the maximum number specified in Annex A (the " Maximum Number" ) minus (y) such number, if any, as may be issued and sold in any offerings of the kind referenced in clause (i) above; provided that the Actual Number shall not be less than the minimum number specified in Annex A (the " Minimum Number" ). For purposes of this Agreement, the term " Transaction Documents" refers collectively to this Agreement, the Registration Agreement (as hereinafter defined) and the Certificate of Designations, in each case as amended, modified or supplemented from time to time in accordance with their respective terms.
NOW, THEREFORE , in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:
Article I
OTHER OFFERINGS; BACKSTOP; CLOSING
1.1 Other Offerings . The Company has the right to issue and sell Series A Shares in one or more private placements and/or public offerings from time to time and at any time after the date hereof but before the Closing Date on such terms and conditions as it shall determine in its sole discretion (each such transaction, an " Offering" ); provided that the terms and conditions of any Offering taken as a whole shall not be more favorable to the purchasers than those relating to the Purchase (as defined below) and the aggregate number of Series A Shares issued in such Offerings and the Purchased Securities shall not be greater than 7,500,000.
1.2 Backstop . On the terms and subject to the conditions set forth in this Agreement, the Company agrees to sell to the Investor, and the Investor agrees to purchase from the Company, at the Closing (as hereinafter defined), the Actual Number of Series A Shares at an aggregate purchase price calculated by multiplying such number by the price per share specified on Annex A , subject to adjustment as provided in Section 1.3(b) (the " Purchase" ). The Series A Shares to be purchased by the Investor pursuant to this Section 1.2 are herein called the " Purchased Securities" .
1.3 Closing .
(a) On the terms and subject to the conditions set forth in this Agreement, the closing of the Purchase (the " Closing" ) will take place at a location mutually agreed to by the parties hereto at 10:00 a.m., New York time, on the earlier of (i) July 31, 2008 or (ii) the date five business days after the receipt by the Investor of a notice from the Company that all conditions precedent set forth in Section 1.3(e) have been satisfied or waived, but in no event earlier than June 30 2008, or at such other place, time and date as shall be agreed between the Company and the Investor. The time and date on which the Closing occurs is referred to in this Agreement as the " Closing Date" .
(b) Subject to the fulfillment or waiver of the conditions to the Closing in Sections 1.3(c) and (d), at the Closing, (i) the Company will deliver to the Investor the Purchased Securities, as evidenced by one or more certificates dated the Closing Date and bearing appropriate legends as hereinafter provided for, registered in the register of members of the Company in such Investor' s name and (ii) the Purchaser will deliver to the Company by wire transfer of immediately available United States funds to a bank account that has been designated by the Company no later than two business days prior to the Closing Date an amount equal to (x) the product of the number of Purchased Securities multiplied by the price per Series A Share specified on Annex A less (y) an amount equal to 3.0% of the product of (A) the price per Series A Share specified on Annex A multiplied by (B) the difference between the Maximum Number and the Actual Number. Each of the Company and the Investor agree to execute and deliver to the other party at Closing a Registration Rights Agreement (the " Registration Agreement" ) in the form of Annex C .
(c) The respective obligations of each of the Investor and the Company to consummate the Closing is subject to the fulfillment (or written waiver by the Investor or the Company, as applicable) prior to the Closing of the condition that (i) any approvals or authorizations of or notices to (or expiration of any applicable waiting periods of) the governmental and self-regulatory authorities, domestic and foreign, having jurisdiction over the Company and its subsidiaries (collectively, " Regulatory Entities" ) specified on Schedule 1.3(c) have been received or made (or occurred) as applicable, (ii) the Company shall have been advised by the NYSE that the Common Shares issuable upon conversion of the Purchased Securities will be listed on the New York Stock Exchange (" NYSE" ), subject to official notice of issuance and (iii) there shall be no
- 2 -
effective injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction directing that the transactions provided for herein or any of them not be consummated as herein provided.
(d) The obligation of the Company to consummate the Closing is also subject to the fulfillment (or waiver by the Company) at or prior to the Closing of each of the following conditions:
(i) (A) the representations and warranties of the Investor set forth in this Agreement shall be true and correct (without regard to " materiality" or " Material Adverse Effect" qualifications included therein) as though made on and as of the Closing Date (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct as of such other date) except to the extent that the failure of such representations and warranties to be so true and correct, individually or in the aggregate, does not have and would not reasonably be expected to have an Investor Material Adverse Effect, (B) the Investor shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing and (C) the Company shall have received a certificate, dated the Closing Date, signed by an executive officer of the Investor, certifying on behalf of the Investor that the conditions specified in the foregoing clauses (A) and (B) have been fulfilled;
(ii) the Company shall have received from the Investor a duly executed, valid, accurate and properly completed Internal Revenue Service (the " IRS" ) Form W-9 or an appropriate IRS Form W-8 evidencing the Investor' s entitlement to an exemption from backup withholding; and
(iii) the Investor shall have duly executed and delivered to the Company the Registration Agreement.
(e) The obligation of the Investor to consummate the Closing is also subject to the fulfillment (or waiver by the Investor) at or prior to the Closing of each of the following conditions:
(i) (A) the representations and warranties of the Company set forth in clause (3) of Section 2.2(j) shall be true and correct in all respects as of the Closing Date as though made on and as of the Closing Date, (B) except for the representations and warranties of the Company set forth in clause (3) of Section 2.2(j), each of the representations and warranties of the Company set forth in this Agreement shall be true and correct (without regard to " materiality" or " Material Adverse Effect" qualifications included therein) as of the Closing Date as though made on and as of the Closing Date (other than representations and warranties that by their terms speak as of another date, which representations and warranties
- 3 -
shall be true and correct as of such other date), except to the extent that the failure of such representations and warranties to be so true and correct, individually or in the aggregate, does not have and would not reasonably be expected to have a Material Adverse Effect, (C) the Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing and (D) the Investor shall have received a certificate, dated the Closing Date, signed by the Chief Executive Officer or the Chief Financial Officer of the Company, certifying on behalf of the Company that the conditions specified in the foregoing clauses (A), (B) and (C) have been fulfilled;
(ii) the Company shall have duly executed and delivered to the Investor the Registration Agreement;
(iii) the Investor shall have received from Conyers Dill & Pearman and/or Sullivan & Cromwell LLP, counsel for the Company in Bermuda and the U.S. respectively,
Legal Opinionsaddressed to the Investor, dated as of the Closing Date, in the forms attached as Annexes D and E, respectively; and (iv) On or before the Closing Date, the Company shall have received debt and/or equity financing in an aggregate amount equal to at least $750,000,000 minus the amount of proceeds from the sale of the Purchased Securities to the Investor, from one or more financial institutions or other persons pursuant to credit or other agreements, in public and/or private offerings of senior, subordinated or convertible debt, common, convertible preferred or preferred equity or rights to acquire any of the foregoing or otherwise, provided that (1) to the extent such financing involves bank financing (or any financing pursuant to a credit or similar agreement), such bank financing shall have terms that in the aggregate are no less favorable to the Company than the terms contemplated in Annex F Bank Financing, (2) to the extent such financing involves other debt financing, such other debt financing shall have terms that in the aggregate are no less favorable to the Company than the terms contemplated in Annex F Other Debt Financing, and (3) to the extent such financing involves equity financing the Investor shall be entitled to any adjustment under Section 3.11 that may apply in respect of such equity financing. For the avoidance of doubt, convertible debt shall be treated as other debt financing and equity financing and shall be subject to both clause (2) and clause (3) above. The financing to be received by the Company as provided in the first sentence of this clause (iv) must either be received by the Company at or prior to the Closing or all the conditions to the lenders' (or investors' ) obligations to provide such financing (other than a condition that the Closing shall have occurred) must be satisfied or waived at or prior to the Closing. It is understood and agreed that the Company intends to issue and sell additional Series A Shares in connection with one or more Offerings concurrently with or shortly before the Closing. The consummation of any such Offering shall not be a condition to the obligations of the Investor under this Agreement.
- 4 -
1.4 Interpretation . When a reference is made in this Agreement to " Recitals," " Articles," " Sections" or " Annexes," such reference shall be to a Recital, Article or Section of, or Annex to, this Agreement unless otherwise indicated. The terms " herein" , " hereof" , " hereto" and the like refer to this Agreement in its entirety. The terms defined in the singular have a comparable meaning when used in the plural, and vice versa. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the words " include," " includes" or " including" are used in this Agreement, they shall be deemed followed by the words " without limitation." No rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation between sophisticated parties advised by counsel. All references to " $" or " dollars" mean the lawful currency of the United States of America. Except as expressly stated in this Agreement, all references to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and include any successor or analogous statute, rule or regulation that replaces the same.
Article II
REPRESENTATIONS AND WARRANTIES
2.1 Disclosure .
(a) Investor' s Review . The Investor acknowledges that it has conducted a review and analysis of the business, assets, financial condition, result of operations, cash plans, management and prospects of the Company and its subsidiaries that the Investor considers sufficient for purposes of deciding whether or not to make the Purchase. The Investor further acknowledges that it has had full access to all the information, and has had an opportunity to ask all the questions of and has received all the answers from the Company' s management and other representatives, regarding the Company' s business, assets, financial condition, results of operations, cash flow, management and prospects (including the events and matters referenced in the Publicly Disclosed Information), and the terms and conditions of the Purchase and the Purchased Securities, that the Investor considers necessary or appropriate for deciding whether or not to make the Purchase. In addition, in connection with the Purchase, the Investor has had such opportunity to consult with its own counsel, tax advisers and other professional advisers as the Investor believes is appropriate.
- 5 -
(b) Investor' s Non-Reliance . The Investor acknowledges and agrees that neither the Company or any of its Affiliates, nor any person representing the Company or any of its Affiliates, has made to the Investor or any of its representatives, and the Investor is not relying upon, any representation, warranty or agreement with respect to the Company, the Purchase, the Purchased Securities or the Common Shares issuable upon conversion of the Purchased Securities, other than the representations, warranties and agreements of the Company expressly contained in this Agreement and the other Transaction Documents. Without limiting the foregoing, the Investor acknowledges that neither the Company nor any such other person has made, and the Investor is not relying upon, any representation, warranty or agreement with respect to the accuracy or completeness of the information (written or oral) provided to the Investor in connection with its prospective investment in the Purchased Securities, or with respect to the appropriateness, suitability or sufficiency of such information for the purpose of enabling the Investor to evaluate such investment, other than the representations, warranties and agreements of the Company expressly contained in this Agreement. (c) Publicly Disclosed Information . As used herein, " Publicly Disclosed Information" means all information set forth or incorporated by reference in (i) the Company' s Registration Statement on Form F-1 (file no. 333-143395) on file with the Securities and Exchange Commission (the " Commission" ) and as it became effective on July 18, 2007, together with the related final prospectus dated such date and on file with the Commission (together, the " IPO Registration Statement" ), (ii) the Company' s Registration Statement on Form S-1 (file no. 333-114079) as filed with the Commission on February 5, 2008 but not declared effective by the Commission (the " Form S-1" ), (iii) the Company' s quarterly and current reports on Forms 10-Q and 8-K and registration on Form 8-A filed with or furnished to the Commission under Sections 13(a), 14(a) or 15(d) of the Securities Exchange Act of 1934 (the " Exchange Act" ) on or after July 18, 2007 and prior to the date hereof (collectively, the " SEC Reports" ) and (iv) the Company' s draft current report on Form 8-K to be filed on or about May 20, 2008, including the draft press release included as an exhibit thereto, attached as Annex G (the " Current 8-K Report" ). The Company represents and warrants that it will file the Current 8-K Report with the Commission on or about May 20, 2008 in substantially the form set forth in Annex G . The IPO Registration Statement, the Form S-1 and the SEC Reports, together with all other reports, schedules, forms, registration statements and other documents required to be filed by the Company with the SEC since January 1, 2006 and any reports, schedules, forms, registration statements and other documents required to be filed with the SEC subsequent to the date hereof, are herein collectively called the " SEC Filings" . 2.2 Representations and Warranties of the Company . The Company represents and warrants to the Investor that as of the date hereof and as of the Closing Date:
(a) Organization, Authority and Significant Subsidiaries . The Company has been duly incorporated and is validly existing as an exempted company in
- 6 -
good standing under the laws of Bermuda, with corporate power and authority to own or lease its properties and assets and conduct its business in all material respects as currently conducted, and, except as, individually or in the aggregate, has not had or would not reasonably be expected to have a Material Adverse Effect, has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business so as to require such qualification; each subsidiary of the Company that is a " significant subsidiary" within the meaning of Rule 1-01(w) of Regulation S-X under the Securities Act of 1933, as amended (the " Securities Act" ) (individually a " Significant Subsidiary" and collectively the " Significant Subsidiaries" ), has been duly organized and is validly existing in good standing under the laws of its jurisdiction of organization. As used herein, " Material Adverse Effect" means any event, change, development or effect that is material and adverse to the business, assets, results of operations or financial condition of the Company and its subsidiaries taken as a whole, or on the ability of the Company to consummate the Purchase and the other transactions contemplated for it by this Agreement.
(b) Capitalization . (i) The authorized and outstanding share capital of the Company (but without giving effect to the issuance of up to the Maximum Number of Series A Shares plus any additional Series A Shares that may be issued in the Offerings and of Common Shares issuable upon conversion thereof) is set forth in Recital A, (ii) all of the issued and outstanding Common Shares of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and were not issued in violation of any preemptive rights, resale rights, rights of first refusal or similar rights and (iii) all of the issued and outstanding shares of capital stock and all other equity interests of each Significant Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable, were not issued in violation of any pre-emptive rights, resale rights, rights of first refusal or similar rights, and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. It is understood and agreed that the Certificate of Designations may be amended by the Company prior to Closing solely to provide that the total number of authorized Series A Shares may be increased up to 7,500,000.
(ii) Except as set forth in Schedule 2.2(b)(ii) and as contemplated by this Agreement, there are no existing options, warrants, calls, preemptive (or similar) rights, subscription or similar rights, agreements, arrangements or commitments of any character obligating the Company to issue, transfer or sell, or cause to be issued, transferred or sold, any shares of capital stock of the Company or other equity interests in the Company or any securities convertible into or exchangeable for such shares of capital stock or other equity interests, and there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any of its capital shares or other equity interests.
- 7 -
(iii) The Company has not made, issued or declared, and will not make, issue or declare prior to Closing, any dividends or other distributions in cash, capital stock or other property with respect to any of its capital stock. Except as contemplated by this Agreement or as set forth on Schedule 2.2(b)(iii), the Company is not, and will not be prior to Closing, a party to any agreement pursuant to which it has agreed or will agree for the benefit of any person, or granted any person the right to require the Company, to register with the Commission any securities issued by the Company held or to be held by such person.
(iv) The Common Shares are listed on the NYSE. The Company has taken no action designed to, or that is likely to have the effect of, terminating the trading of the Common Shares on the NYSE or de-registering the Company under the Exchange Act, nor has the Company received any notification that the Commission or NYSE is contemplating terminating such registration or listing.
(v) The consummation of the transactions contemplated by this Agreement and the issuance of the Series A Shares (or the Common Shares upon conversion thereof) will not trigger the anti-dilution provisions or other price adjustment mechanisms of any outstanding subscriptions, options, calls, warrants, commitments, contracts, preemptive rights, rights of first refusal, demands, conversion rights or other agreements or arrangements of any character or nature whatsoever under which the Company is or may be obligated to issue or acquire shares of any of its capital stock. (vi) No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the stockholders of the Company may vote are issued and outstanding.
(c) The Purchased Securities . The Purchased Securities and the Common Shares issuable upon conversion of the Purchased Securities are duly authorized by all necessary corporate action on the part of the Company and, when issued and delivered as provided in this Agreement, will be duly and validly issued, fully paid and nonassessable, will have the rights set forth in the Certificate of Designations and the Company' s bye-laws and memorandum of association, as applicable, and the issuance thereof will not be subject to any preemptive, subscription or similar rights. (d) Authorization and Enforceability of Transaction Documents .
(i) The Company has the corporate power and authority to execute and deliver the Transaction Documents to which it is a party ...